Friday, June 5, 2009

Although the company he started has been experiencing a fair bit of trouble lately, Richard Warren Sears stands as a giant hero of capitalism.

Richard Sears was born in rural Minnesota, and like so many of the titans of the late nineteenth century, started his career in telegraphy (the dot-com, Silicon Valley industry of its day). As part of his job, he moved into being a freight agent, handling products ordered by rural retailers from urban wholesalers or manufacturers and delivered by rail. When a shipment of watches was refused, Sears contacted the company to return them, but they offered him a deal instead. Take the watches at a reduced price and sell them for whatever he could. He hit immediately on the facilitation that the telegraph communications network could provide. He began selling the watches to other freight agents along the rail line for a slightly higher price, inducing them to sell them to the ultimate customers in their communities.

Within months, Sears had become a part-time watch salesman, netting several thousand dollars in income. After he moved to Chicago to start a full-time business, he teamed up with Alvah Roebuck, a watch repairman, to begin a big operation. He relied upon trust—he offered money back guarantees, allowed COD to ensure customers could inspect his product before remitting payment, and he offered low prices—all of these helped reassure a public who had not yet become accustomed to buying products from distant merchants.

By the mid-1890s, Sears and Roebuck had expanded to hundreds of products. They began printing catalogues (much like competitor Montgomery Ward) and sending them through the mail to hundreds of thousands of Americans.

Sears particular genius lie in writing product descriptions in florid and detailed language. Modern readers of the old Sears catalogues are surprised to find pages filled not only with illustrations but also thousands of words of small-print text. Sears had a knack for discerning the mindset of rural customers—the same people he had known growing up in Minnesota. He was a consummate salesman, and his unbridled energy eventually helped the company expand, with the business organization help of Julius Rosenwald, into the premier mail order company in America. By the time Sears retired from the company in 1908, he had helped increase its sales from $138,000 per year in 1891 to $50 million annually when he left.

Other heroes of capitalism, to be profiled in the future, helped the company that Richard Sears start become a world leader, but it was the genius of the boy from Minnesota that started it all.